FinCEN (Financial Crimes Enforcement Network) is the Office of Financial Crime Control in the United States. In December 2020, it published a proposed regulation for the enforcement of KYC, i.e., the identification and collection of personal data, for the movement of funds made with cryptoactives to private (non-custodial) wallets, when the amount equals or exceeds US$3,000. For movements exceeding US$10,000 the obligation is to report such transfers to the authorities.
The KYC (Know Your Costumer) and AML (Anti Money Laundering) processes, oblige by law the institutions that trade cryptoactives, to require their clients to provide personal data, such as address, ID card, passport or driver’s license, with a selfie (close-up photo) when opening an account.
FinCEN’s new proposal will require exchanges to identify the beneficiaries of funds they transfer to private, non-custodial wallets. This means that they do not necessarily have to be users or customers of the exchange, because the exchange customer can send a payment to another individual who is not.
Therefore, KYC’s degree of control is greater than that proposed.
Moreover, this regulation that would be in force in the United States would exceed its legal power of jurisdiction, since in case the recipient of the funds reached by the regulation was a citizen of another country with his private wallet, he would also be informed.
Surely other countries will adopt the regulations, since the United States is a major player, and will coerce them to do so, which does not imply that they are unaware of the above-mentioned overreaching.
It is ironic that the electronic records tokenized in the blockchains are called cryptoactive, and are not recognized as money, (so that they cannot compete with the sovereign currencies of the States), but they are intended to impose similar controls on the currencies of legal use as if they were trust money, resembling bank transfers.
To date, they are considered assets, with a tax treatment similar to that of publicly traded stocks. The latter are not subject to the above-mentioned controls.
In my opinion, the new proposed regulation is an excess of control, and results in a violation of individual privacy. This demonstrates the voracity of governments in trying by all means to dominate their citizens.
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